Public Plan Politics: Best Way To Get It In May Be To Leave It Out

Advocates of a government-run insurance option could be best served by waiting for the House/Senate conferencing process to fight over the plan's inclusion rather than pushing it in the Senate dealmaking stage.

Leaving the public plan option out of the Senate health reform agreement may be the most successful and expeditious strategy for advocates to ensure the proposal makes it into the final compromise.

The bipartisan Senate Finance Committee health reform agreement has been delayed due in large part over the question of whether to include a public plan in a national insurance exchange of competing private plans.

Liberal Democrats on the committee say there can be no deal without it while Republicans are steadfast that a bipartisan agreement with it is a nonstarter. Chairman Max Baucus, D-Mont., and moderate Democrats have been working intensely toward a middle ground.

For public plan proponents, the best outcome may be for the Senate Finance agreement to be forged without the government option and look for a negotiating point further along in the process.

In other words, lose the battle to win the war.

Waiting holds three key advantages for government option proponents and, more broadly, Democrats.

First, exclusion would significantly accelerate the rate at which a bipartisan agreement could clear the Finance Committee. Moreover, the passage of a reform bill out of the Finance Committee in advance of the August congressional recess likely means the full House would be able to vote on its tri-committee bill because lawmakers would have clarity on all the options on the table coming out of the Senate.

Second, it would offer specific proof to members of Congress and the public that Democrats pushed the limits in order to build a true bipartisan compromise over health reform legislation that will have a broad impact on the economy.

Third, leaving the public plan out of the Senate piece of negotiations provides significantly fewer fail points for Democrats. For example, under the current scenario, Democrats are fighting to ensure that the public plan gets in to the Finance Committee agreement. Subsequently, they would have to struggle to make certain the option stays in the Finance/Senate Health Committee compromise as Senate Majority Leader Harry Reid, D-Nev., melds the two pieces of legislation over the August break.

By conceding the Senate, proponents would have to focus on the House-Senate conference process - inclusion of the public plan is seen as a certainty for the House bill - and the final floor votes.

In addition, the public plan's exclusion in earlier rounds of negotiations may offer a silver lining to opponents who may be resigned to its inclusion at some stage. The inclusion of the public option would theoretically represent one necessary demand by the Obama administration if it were previously left out, thus leaving the White House with a shorter list of concessions it can reasonably ask of negotiators and expect to be granted at the end of the process (Also see "White House Economic Team Sees Senate As Target To Intervene In Health Reform" - Pink Sheet, 22 Jul, 2009.).

The pharmaceutical and biotech industries have been opposed to a public plan because of the potential for a government-managed option to set drug prices or negotiate prices directly with manufacturers (" Biopharma and Health Reform," May 2009, The RPM Report).

The major calculated risk for advocates is that the public plan could be left out as both sides close in on a deal, with the government option serving as the sacrificial provision to ensure a signature health reform bill is passed by a Democratically controlled Congress. And that's a risk opponents of the public option would be more than happy to take.

However, based on President Obama's comments during a primetime press briefing and repeated at a next-day rally in Cleveland, it's difficult to see a health reform bill signed into law without a public plan option.

"There have been reports just over the last couple of days of insurance companies making record profits, right now. At a time when everybody is getting hammered, they're making record profits, and premiums are going up. What's the constraint on that?" Obama said at the briefing on the need for a public plan to compete with private insurers.

Still, the Senate Finance Committee will likely include a non-profit, co-op insurance option in its agreement as part of a compromise. One possible outcome is the creation of both the non-profit co-op and a public plan option in a final health reform bill (" Predicting Health Reform," June 2009, The RPM Report.)

-Ramsey Baghdadi ([email protected])